Foreclosures Soar In Kent Since 2004

February 8, 2008
Text Size:

GRAND RAPIDS — While much of the country is blaming the sub-prime mortgage fiasco as the main culprit behind the recent rash of home foreclosures in the nation, another perpetrator is being held responsible for the problem here.

“The conventional wisdom for states like Michigan and Ohio is, it’s an economic problem,” said Shelby Chartkoff, lead researcher for a Kent County foreclosure study done by the Community Research Institute at Grand Valley State University.

“It’s a systemic issue. A lot of people are dealing with job losses. It will take time to turn this around,” said Chartkoff.

Chartkoff and CRI Executive Director Gustavo Rotondaro presented the findings of the study, which tracked foreclosures in the county from 2004 through last year, to the county’s Finance Committee last week. The county funds most of its general operations with revenue from property taxes and County Equalization. Director Matt Wolford told the committee the large spike in foreclosures shouldn’t affect county revenue in the short term.

Wolford said when lenders repossess a house, they make sure the property taxes are paid, because they don’t want to lose a home to a tax sale. Also, some mortgages deposit a share of the house payment into a property-tax escrow account.

But Wolford said the foreclosures have a potential to create a long-term revenue problem for the county. If repossessions continue to rise, then home values will fall, as will the taxable value of all residences in the county, and homeowners will pay less property taxes. Then, he said, the county will be receiving less revenue for general operations.

County Administrator and Controller Daryl Delabbio said information he received revealed there were more foreclosures in the county last month than there were in the 24 months that comprised 1995 and 1996.

Chartkoff supported the surge Delabbio brought up by saying the foreclosure rate in the county rose by 175 percent from 2004 to 2007, going from 1,133 to 3,116. In just the past two years, she noted that 5,463 foreclosing actions were taken in Kent — a figure that equals 3 percent of all the 179,586 homes in the county.

“It’s a grim situation for a community,” said County Commissioner Jack Boelema.

Chartkoff said the areas hardest hit by foreclosures were neighborhoods in Wyoming and Grand Rapids, especially those with large populations of African Americans and low-income wage earners. Villages and townships in northern Kent County were hammered, too.

“Those areas have been hit very hard,” she said.

But even more affluent municipalities like East Grand Rapids and Ada Township haven’t been immune to repossessions.

“Foreclosure is moving quite quickly into the wealthier areas of the county,” she said.

Some of the more dismal findings from the study  were:

**In 2007, Grand Rapids was the city with the highest foreclosure rate, at 2.8 percent of all homes. Cedar Springs (2.4 percent) and Wyoming (2.3 percent) weren’t far behind.

**The Baxter, Fuller Avenue, Madison, South East and Oakdale neighborhoods had foreclosure rates in 2007 that were twice the rate for Grand Rapids as a whole. The rates in those neighborhoods ranged from 5.8 percent to 7 percent.

**The fastest rates of foreclosure growth the past four years were in the Grand Rapids neighborhoods of Heritage Hill (650 percent), South East (433 percent), Millbrook (350 percent) and Eastown (283 percent).

**Casnovia and Kent City had 2007 foreclosure rates of 3 percent of all homes.

The CRI study put the average cost of a foreclosure at $7,000. The study said the 7,963 foreclosures that occurred from 2004 to 2007 may have cost municipalities more than $55 million in supervision and upkeep expense and lost utility revenue. The study also reported that foreclosures in Grand Rapids alone last year may have cost the city $10 million.

The study also estimated that each foreclosure costs a lender about $60,000 in legal fees and lost interest, and in the expenses incurred to list and sell the foreclosed homes.

“Banks lose a lot of money from foreclosures. But they’re not properly staffed to deal with this,” said Chartkoff.

Chartkoff said Kent County, CRI and the county’s Emergency Needs Task Force were coming together in an attempt to address the problem.

CRI is part of the Dorothy Johnson Center for Philanthropy at GVSU. Rotondaro said the foreclosure report is available at

Recent Articles by David Czurak

Editor's Picks

Comments powered by Disqus